The United Kingdom has high levels of unemployment. The level fluctuates, but even in a supposedly good year it will be sufficiently high to ensure that worklessness remains a way of life for far too many people in this country.
An employer can advertise almost any number of job vacancies which pay only the minimum wage, and still expect to fill possibly every single vacancy. Doubtless there may be exceptions where certain very specific skills are required, but I don't see much evidence of actual exceptions.
People who claim jobseekers' allowance soon find out that their payments can be sanctioned at almost any time, and so the incentive to find a job - even at a low wage - soon becomes obvious.
On the one hand, it might seem pointless for an employer to offer to pay more than the minimum wage when they do not need to pay any more in order to fill their vacancies. Then again, a lot of employers rely on the flexibility provided by overtime.
Not everyone is prepared to work overtime, however. In the past few months I have talked with a young woman who was unwilling to work overtime at any price, and with a man who was unwilling to work overtime unless he were to be paid around ten pounds per hour - which is significantly more than the minimum wage.
When employees refuse to work overtime, an employer must either recruit more staff, or pay a recruitment agency to supply more staff, or else allow a backlog of work to build up. Given that newly recruited staff are often of little use until they have received some in-house training, then a backlog of work might build up even where more staff are recruited. In other words, there is an advantage to having existing employees agree to work overtime, and paying above the minimum wage can assist in that process.
A related point is employee retention. It is not productive for managers to be perpetually engaged in recruiting and training new staff, and so there is an obvious incentive for most employers in having their existing staff remain on the payroll. Nevertheless a lot of employers face quite serious problems of staff turnover.
Paying above the minimum wage can probably help employers to retain staff, although there is no magic formula here. There are many reasons why an employee might leave, and not all of them are related to money.
In my experience, people who work either for the minimum wage or for not much more than the minimum wage tend to be efficient and dedicated. Nevertheless, an employer who pays significantly above the minimum wage can expect greater efficiency in the long term through lower levels of staff turnover and higher levels of overtime.
Related previous posts include:
Fellow blogger is wrong about the minimum wage
We get monkeys anyway
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